02015cas a2200265 a 4500 AALejournalIMF018363 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484349861 1018-5941 BD-DhAAL BD-DhAAL Alter, Adrian. Understanding the Macro-Financial Effects of Household Debt : A Global Perspective / Adrian Alter, Alan Xiaochen Feng, Nico Valckx. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (49 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We confirm the negative relationship between household debt and future GDP growth documented in Mian, Sufi, and Verner (2017) for a wider set of countries over the period 1950-2016. Three mutually reinforcing mechanisms help explain this relationship. First, debt overhang impairs household consumption when negative shocks hit. Second, increases in household debt heighten the probability of future banking crises, which significantly disrupts financial intermediation. Third, crash risk may be systematically neglected due to investors' overoptimistic expectations associated with household debt booms. In addition, several institutional factors such as flexible exchange rates, higher financial development and inclusion are found to mitigate this impact. Finally, the tradeoff between financial inclusion and stability nuances downside risks to growth. Mode of access: Internet Valckx, Nico. Xiaochen Feng, Alan. IMF Working Papers; Working Paper ; No. 2018/076 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/076/001.2018.issue-076-en.xml IMF e-Library